Pricing Commonly Owned Complementary Products: You are a hospital administrator

Question

Pricing Commonly Owned Complementary Products:

You are a hospital administrator trying to raise capital to refurbish the hospital. Your local bank is reluctant to lend to you because you already have a large mortgage on the property on which the hospital complex lies. But your bankers tells you that they can lend you more if you reduce your debt by selling your parking lot to some private investors who'll lease it back to you for the next 50 years. And you'll have to renegotiate the price of the lease every 5 years. What concerns might you have about this sales-and lease-back contract?

Explanation / Answer

Concerns 1) Lease rentals 2) Termination of Contract - On what conditiions the contract can be cancelled 3) Terms of renegotiation of the price

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